In a report to clients Monday, Citigroup analyst Rich Gardner raised his estimates for the three-month period ending March to per-share earnings of $1.23 on sales of $7 billion, up from $1.14 and $6.9 billion.
More importantly, however, the analyst said he's looking for the Cupertino-based company to report near record gross margin of 36.5 percent, driven largely by sharp reductions in the cost of solid-state memory components such as DRAM and NAND flash.
Gardner is modeling for 38 percent yearly Mac growth to 2.1 million systems, up from his previous estimate of 2.0 million, driven by upside from better than expected sales of Mac Pros and the new MacBook Air sub-notebook.
iPhone sales should come in at roughly 1.5 million units for the quarter, of which grey market sales will be a large contributor, he said. Meanwhile, the analyst is expecting iPod units to come in at 9.5 million, down from his previous estimate of an even 10 million units.
"iPod should struggle until the line is refreshed in [the third calendar quarter]," he wrote.
Gardner reiterated his Buy rating on Apple shares, which remains Citigroup's "Top 2008 Pick" with a 12-month price target of $212 per share.
RBC Capital Markets
Separately on Monday, RBC Capital Markets analyst Mike Abramsky also issued upbeat pre-earnings report on Apple, saying he expects the company to report earnings of $1.11 per share on sales of $7.2 billion.
The analyst's checks and proprietary data have him modeling for 46 percent Mac growth to 2.2 million systems, a 5 percent decline in iPods to 10 million units, and iPhone sales of 1.8 million units.
More specifically, Abramsky said he expects the Mac maker to report sales of 1.3 million notebook systems, including 150,000 MacBook Airs. Meanwhile, iTunes revenue is estimated to rise 19 percent to $777 million, and Apple TV shipments are expected to have more than doubled during the quarter to approximately 200,000 units.
"Although economic slowdown remains a risk, Apples fundamentals remain healthy, and earnings power and cash flow remains strong," Abramsky wrote.
The analyst maintained his Outperform rating but raised his price target on the company's shares to $190 from $175.